Examine the strategic significance of India's cross-border UPI linkages for Act East Policy.

Act East Policy seeks to deepen India's economic and connectivity ties with ASEAN and the wider Indo-Pacific. The internationalisation of the Unified Payments Interface (UPI)—now live in over eight countries [1] and freshly extended to Cambodia via ACLEDA Bank's KHQR on 3 June 2026 [2]—has become a low-cost, high-leverage instrument for realising this vision.

Strategic-diplomatic leverage

• Adds Cambodia to India's expanding Digital Public Infrastructure (DPI) footprint, deepening the Mekong–Ganga Cooperation and countering Chinese alternatives (Alipay/WeChat Pay) in the region [2].
• Central-bank-led linkages (RBI–NBC) build trust-based ties faster than treaty routes, projecting India as a provider of digital public goods [2].

Economic integration

• Cuts FX costs and card-network dependence for travellers, boosting people-to-people and trade flows with ASEAN [2].
• Positions UPI—recognised by the IMF (2025) as the world's largest real-time system with ~49% of global transactions—as a credible regional rail [3].

Challenges to examine

• Only Phase 1 (Indian merchant acceptance) is live; the two-way corridor and settlement/FX mechanics remain pending [2].
• Interoperating architecturally distinct systems (account-based UPI vs DLT-based Bakong) and data-localisation concerns need resolution [2].

Cross-border UPI thus converts a domestic success into strategic soft power, aligning Act East's connectivity goals with the G20 cross-border payments roadmap [4]. Sustained by phased two-way rollout and robust regulatory coordination, it can anchor India as ASEAN's preferred digital-finance partner.